North River Resources : US$5.6 million Fundraising, Share Capital Reorganisation & Notice of General Meeting

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North River Resources plc / Ticker: NRRP / Index: AIM / Sector: Mining

28 June 2016

North River Resources plc

("North River" or the "Company")

US$5.6 million Fundraising, Share Capital Reorganisation & Notice of General Meeting

North River Resources plc announces that a circular including a Notice of General Meeting has today been posted to Shareholders (the "Circular"). The General Meeting is to be held at the offices of Shakespeare Martineau LLP, 6th Floor, Allianz House, 60 Gracechurch Street, London, EC3V 0HR on 18 July 2016 at 2.00 p.m. (London time) . A copy of the circular and Notice of General Meeting will also be available to view on the Company's website www.northriverresources.com.

The definitions that apply throughout this announcement can be found at the end of this announcement.

PART 1: LETTER FROM THE INDEPENDENT NON-EXECUTIVE CHAIRMAN

Dear Shareholders

Share Capital Reorganisation

Financing Proposals for Open Offer and Placing of up to 12,317,359 Open Offer Shares and Placing Shares at 23.75 pence per share

Grant of conversion rights in respect of Loan Notes Waiver of Rule 9 of the Code Authorisation to issue Equity Securities and

Notice of General Meeting

1. Introduction

   The Company announces today that it has raised conditionally $5.6 million through the issue of new secured, conditionally convertible loan notes (the "Loan Notes") to Greenstone Resources LP, further details of which are set out in paragraph 5 of this Part I. The funds raised will be used, in conjunction with the Company's existing cash resources, to repay the 2015 Convertible Loan Notes issued to Greenstone in 2015 pursuant to the terms of the 2015 Convertible Loan Note Instrument and 2015 Investment Agreement and to provide working capital for, inter alia, the Company's short term Work Programme and ongoing planning for commencing outstanding pre-construction work streams.

   The Company also announces today Financing Proposals to issue new shares in the Company to enable it to redeem the Loan Notes in full, subject to Shareholder approval. The Company proposes to redeem the Loan Notes as to 30 per cent. through conversion of such Loan Notes into New Greenstone Shares and as to 70 per cent. from the proceeds of an open offer to all Eligible Shareholders (other than Greenstone) (the "Open Offer") and a placing of Placing Shares with existing and new shareholders (the "Placing"). To the extent that the Open Offer and the Placing do not raise sufficient funds to repay 70 per cent. of the Loan Notes not already converted or repaid, it is proposed that the remaining Loan Notes will also be converted in to New Greenstone Shares at the Conversion Price.

   On completion of these Financing Proposals, the Company will have net additional working capital of approximately US$2.5 million (before expenses). The Board believes the Namib Project continues to be the best option to create value for all Shareholders. Subject to approval of all Resolutions, the Company will be substantially debt free and fully funded to meet its Phase One Funding Requirement as set out below.

   On completion of the Financing Proposals, if approved by Shareholders, Greenstone will be interested in a minimum of 29.997 per cent. of the Enlarged Share Capital and a maximum of 76.67 per cent. of the Enlarged Share Capital. Ordinarily, the acquisition of an interest in 30 per cent. or more of the voting rights in the Company's shares would require Greenstone to make a mandatory bid under Rule 9 of the Code. Accordingly, the Board is seeking, inter alia, the approval of the Shareholders other than Greenstone (the "Independent Shareholders") of a waiver by the Panel of Rule 9 of the Code (the "Waiver") which the Panel has agreed with the Company to grant, subject to the passing of the ordinary resolution proposed as Resolution 4 (as set out in the attached notice of general meeting) (the "Whitewash Resolution") by the Independent Shareholders at a general meeting of the Company, of any obligation on the part of Greenstone, to make a general offer to Shareholders under Rule 9 of the Code which otherwise might arise upon any conversion of the Loan Notes.

   Greenstone's subscription for $5.6 million of Loan Notes provides the Company with certainty of funding from today, without which it would need to commence drastic measures to reduce spending and more than likely enter into an insolvency process, which would almost certainly lead to the loss of control over the Company's principal asset, being the Namib Project. The Loan Notes subscription and the Financing Proposals are the only terms on which Greenstone is willing to finance the Company at this stage and, whether or not the elements of the Financing Proposals which are subject to Shareholder approval (the subject of this document) are approved, the Loan Notes subscription and the Financing Proposals secure the Company's immediate financial position and provide a structure in which all Shareholders are able to participate and to retain an interest in the Company.

   As the proposed Issue Price of the Open Offer and the Placing (being equivalent to 0.095 pence on a pre Share Capital Reorganisation basis) is below the nominal value of the Existing Ordinary Shares (being 0.2 pence per Existing Ordinary Share) which would not be permitted under the Companies Act, the Company intends, subject to Shareholder approval, to re-organise its share capital to enable the Financing Proposals to proceed. Shareholder approval is therefore also being sought for a sub-division, re-designation and consolidation of the Existing Ordinary Shares in order to permit the Company to raise capital through the issue of additional equity (the "Share Capital Reorganisation"). The Share Capital Reorganisation will also have the effect of reducing the number of ordinary shares in issue. The Directors believe that this will result in a market share price that will be at a more appropriate level for the Company as well as reducing the share price volatility.

   The Company is therefore convening a general meeting, to be held at the offices of Shakespeare Martineau LLP, 6th Floor, Allianz House, 60 Gracechurch Street, London, EC3V 0HR at 2.00 p.m. on 18 July 2016, to approve the necessary resolutions to allow the Financing Proposals to proceed (the "General Meeting"). Further details of the General Meeting and Resolutions to be put forward thereat are set out in the Circular.

   Shareholders should note that, if any of the Resolutions set out in the notice of General Meeting of the Company dated 28 June 2016 are not passed, none of the Financing Proposals will proceed. In that event, absent any other fundraising by the Company, it is highly likely that the Company would be unable to repay the Loan Notes before the final Maturity Date and would therefore be in default of the terms of the Loan Notes. In such circumstances, Greenstone would not be able to convert the Loan Notes into New Greenstone Shares but would have the right to enforce the Security over the Group's principal asset, NLZM, the operating subsidiary which owns and operates the Namib Project. Greenstone has indicated that, in the event of such a default, it would be its intention to exercise its rights in relation to the Security. This would leave the Group in a highly uncertain financial position and in all likelihood it would result in the Group companies ceasing to trade, insolvency and, ultimately, the liquidation of the Group resulting in Shareholders losing their investment in the Company. The Independent Directors, having considered the likely alternative sources of capital, believe that it is highly unlikely that alternative funding could be secured either now or, in the event that Shareholders do not approve the Resolutions, before the final Maturity Date. The Company, having exhausted all other potential avenues for new financing, has, to date, not identified new sources of financing, in what continues to be a challenging market environment for pre-construction mining projects such as the Namib Project. As such, it is critical that Shareholders vote in favour of the Resolutions at the General Meeting so that the Financing Proposals can proceed and the Group can continue trading.
2. Current trading and prospects

   The Company submitted an application for a Mining Licence for the Namib Project in April 2014 while working through the final phase of the DFS, which was announced in November 2014. The results of the DFS, in combination with a detailed Board-level review, identified key additional studies on the mine development plan and mining process flow sheet that would be required ahead of the Company being in a position to take an investment decision on the Namib Project. The Company advanced these studies during the first half of 2015, announcing the results of the metallurgical test work programme on 22 July 2015.

   Over the same period, the Company has also continued to focus on exploration drilling at the Namib Project following the last Mineral Resource Estimate of August 2014. A drilling programme totalling 4,828 metres and 66 holes was completed in the period to November 2015. Of these, 52 per cent. (34 holes) had significant intercepts. The programme focussed primarily on targeting both new extensions of known mineralised shoots, as well as infill drilling to potentially convert Inferred Mineral Resources into the Indicated Mineral Resource category, mainly in the top half of the North orebody, and also below the historic South mine where the majority of the current Inferred Mineral Resources lie.

   Building on this, a follow-on 3,800 metre drill programme is currently underway to test extensions at depth below the current North orebody resource, together with further infill and extension drilling in the Southern resource. Early assay results, as announced on 12 February, 21 March and 26 April 2016, indicate the continuation of mineralisation 80 metres below the existing Northern part of the orebody, providing greater confidence that this drilling campaign could, in due course, result in an increased resource estimate supporting a longer mine life.

   To access sufficient underground drilling locations, a 300 metre drive underneath the existing North resource has been developed (the "5 Level Drive"). The 5 Level Drive was successfully completed in March 2016. As the mine moves into an operational phase, the development drive will be incorporated into the mine plan as an access road.

   Following receipt of funds from the issue of the Loan Notes (the "Greenstone Placing"), the Company expects to be in a position to continue in the first instance with the on-going drilling programme and conclude discussions with the Ministry of Mines and Energy in Namibia (the "Ministry") on the terms and conditions for the final grant of the Mining Licence.

   The Company is cognisant that the above constitutes a further revised timeline to project development of the Namib Project. The discussions with the Ministry on the award of the Mining Licence have further delayed the originally scheduled commencement of construction of the Namib Project.

   As regards the Mining Licence, the Company received a Notice of Preparedness to Grant the Mining Licence from the Ministry on 29 January 2016, which the Company formally accepted on 26 February 2016.

   The Notice of Preparedness to Grant the Mining Licence contained a number of supplementary terms and conditions (the "Supplementary Terms & Conditions") relating to matters including, inter alia, the work programme, production, environment and Namibian participation in the Namib Project that will apply to the Mining Licence. In conjunction with assessing the Supplementary Terms & Conditions attaching to the Mining Licence, the Company also continues to examine the implications of the Government of Namibia's proposed introduction of broad based empowerment legislation. A draft NEEEF Bill has been published for a period of public consultation and can be found on the website of the Office of the Prime Minister of Namibia (www.opm.gov.na/web/opm/neeef-bill). If enacted, the NEEEF Bill will set out obligations for companies, irrespective of sector, in respect of, inter alia, ownership and management participation by previously disadvantaged Namibians. Certain obligations under the draft NEEEF Bill are inconsistent with those laid down under the Supplementary Terms & Conditions to the Notice of Preparedness to Grant the Mining Licence. The extent to which the NEEEF Bill would place additional obligations on the Namib Project and the timeframe for finalising and enacting the

   NEEEF Bill is not clear at this stage. It is an area on which the Company and Namibian mining industry as a whole will need further clarity in due course. Simultaneously with acceptance of the Supplementary Terms & Conditions, NLZM requested the Ministry to clarify a number of these matters. To date, no response has been received from the Ministry.

   On 25 April 2016, the Company submitted a formal proposal to the Ministry on the Company's structure and composition to address the Government of Namibia's objectives of poverty eradication by: (i) providing an opportunity for local ownership of the Namib Project; (ii) participation by historically disadvantaged Namibians in the management of the Namib Project; and (iii) implementing a corporate social responsibility strategy ("ML Proposal"). The pending ML Proposal sets out a broad based local ownership structure that NLZM believes fully addresses the objectives sought under NEEEF and the Ministry's Supplementary Terms and Conditions. The Notice of Preparedness to Grant the Mining Licence makes provision for further engagement between the Ministry and the Company to seek agreement on the final Supplementary Term & Conditions to be attached to the issue of the Mining Licence.

   On 2 June 2016, the Ministry informed NLZM that it is still reviewing the ML Proposal and that it shall respond to NLZM within 30 days, being on or before 2 July 2016.The Company looks forward to continuing to work with the Ministry on the Mining Licence application and remains confident that the application process will be concluded and the Mining Licence granted. The duration and outcome of these discussions, on the ML Proposal to be agreed under the Supplementary Terms & Conditions, however, remain uncertain and the final issue of the Mining Licence on commercially acceptable terms cannot be guaranteed.

   In light of the above, the Company has devised a revised funding strategy for the Namib Project. Subject to timing of a project construction decision and completion of an updated definitive capital requirement estimate, the Company estimates a total funding requirement of approximately US$30 million through to expected project commissioning of the Namib Project. It is the Company's intention that this financing will be structured in three phases:

3. a phase one funding requirement of US$2.5 million of net new working capital (after repayment of the 2015 Convertible Loan Notes) to cover the short term Work Programme, including securing the Mining Licence and continuing with the resource expansion drilling programme (the "Phase One Funding Requirement");

4. a phase two funding requirement of an estimated US$2.5 million, subject to formal grant and issue of the Mining Licence by the Namibian authorities, to complete the remaining pre- construction work streams, including front end engineering and design, final mine planning and early development, operational readiness, defining an updated capital requirement for the construction of the Namib Project and project financing, (the "Phase Two Funding Requirement"); and

5. a phase three funding requirement, being the capital requirement required for construction of the Namib Project, which will flow from, and be defined on completion of, the pre- construction work streams covered by the Phase Two Funding Requirement and which is indicatively estimated as being an amount of US$25 million (which remains broadly in line with the DFS) (the "Phase Three Funding Requirement").

   Prior to the issue of the Loan Notes, the Company's had cash resources of approximately US$0.3 million (£0.21 million), and would have needed to consider reducing operational expenditure drastically in the short term had further funding not been secured. The Financing Proposals set out in the Circular enable the Company to continue to develop the Namib Project whilst the Mining Licence application process continues. Without further funding, the Company would have had to cease drilling and reduce operational costs to the barest minimum, and would have faced significant difficulties and/or delays therefore in completing the Mining Licence process and progressing towards production.

6. Background to and reasons for the Financing Proposals

7. From September to October 2015, the Company carried out an open offer and placing to eligible Shareholders, and issued the 2015 Convertible Loan Notes to Greenstone raising, in aggregate, a total amount (before expenses) of US$4 million. This was anticipated as being sufficient to provide working capital to enable ongoing development of the Namib Project through to the point at which a decision could be taken to commence construction of the mine (subject to the assumption that the